BlackRock, the world’s largest asset manager, has filed a new application with the SEC amid ongoing uncertainty surrounding Bitcoin and altcoins.
According to The Block, BlackRock has applied to the SEC for a new Bitcoin ETF aimed at mitigating the risk of declines and profiting to some extent from price increases.
Accordingly, the fund, planned to be launched under the name iShares Bitcoin Managed Protection ETF, aims to offer investors Bitcoin-related returns while limiting losses.
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The new ETF, planned to trade under the ticker symbol PBIT, will use BlackRock’s existing spot Bitcoin ETF, iShares Bitcoin Trust (IBIT), as its underlying asset. However, instead of directly holding Bitcoin or Bitcoin ETFs, the fund will combine IBIT-linked option contracts with cash and short-term fixed-income instruments.
The strategy outlined in BlackRock’s filing aims to participate in Bitcoin price increases up to a certain point while mitigating the impact of declines.
At this point, it is planned to impose limits on returns in exchange for protection against declines. In the fund’s strategy, purchased call options help limit downside losses, while sold options set an upper limit on the amount of upside that the investor can profit from.
BlackRock stated in its filing: “This fund aims to provide a certain level of protection against downside risks while offering limited exposure to upside returns on IBIT or similar Bitcoin investment products.”
BlackRock is continuously expanding its Bitcoin ETF portfolio. Bloomberg Intelligence analyst James Saypart stated in a post, “This is BlackRock’s third application related to a Bitcoin ETF. BlackRock currently only operates Bitcoin and Ethereum (ETH) products and does not have any other cryptocurrency products.”
BlackRock’s move goes against the recent trend among other asset management firms to expand their ETF product portfolios to include XRP, Solana, and Dogecoin.
*This is not investment advice.
Continue Reading: BlackRock Makes a Move That Could Start a New Era in Bitcoin: ETF Application Filed with the SEC! Here’s What the New ETF Is For!